Market Report Middle East

Dubai Hotels Occupancy Levels Exceeded 87 Percent for February 2014

MENA Chain Hotels Market Review - February 2014

HotStats Hotels in Dubai maintained robust performance throughout the month of February, as all key indicators reached the highest levels amongst the five cities surveyed in the MENA region, according to the latest data from HotStats.

Dubai hosted a plethora of events and attracted a high number of international visitors that propelled occupancy rates of four and five star hotels to 87.6%. The strong demand allowed hoteliers to increase yields with the market witnessing an 8.7 percent surge in Average Room Rates (ARR) to US$366.99, resulting in Revenue per Available Room (RevPAR) rising 7.3% to US$321.59. An increase in leisure demand in the city contributed a 4.0% and 3.8% rise in food and beverage revenues respectively, as Total Revenue per Available Room (TRevPAR) grew 5.8% to US$554.93. A slight reduction in payroll costs helped hotels register an 8.6% increase in Gross Operating Profits per Available Room (GOPPAR) to an impressive US$282.09.

“Dubai’s stellar hotel performance continued in February as strong occupancy and increasing average rates resulted in Gross Operating Profits exceeding 50 percent of total revenue. Strong economic activity within the city coupled with a consistent rise in visitor numbers has driven demand for Dubai’s hotels, especially food and beverage demand with revenues increasing over 4.0 percent from the same period in 2013. The uplift in overall revenues directly impacted bottom line performance which reached US$ 282.09 per available room” commented Peter Goddard, Managing Director at TRI Hospitality Consulting in Dubai.

Abu Dhabi hotels experienced a 20 percent drop in bottom line performance 

Abu Dhabi hotels struggled to remain afloat in February as average rates fell throughout the month. Although occupancy levels in the capital increased 3.3 percentage points reaching 80.2%, ARR plummeted 18.1% to US$162.46, reducing RevPAR by 14.6 percent to US$130.36. A significant decrease in food and beverage revenues coupled with a decline in conference and banqueting revenues saw TRevPAR drop 8.5% to US$273.68. A 2.5 percentage point rise in payroll costs caused a further profitability decline of 20.5% to US$90.83.

“Although hotels in Abu Dhabi continued to report strong occupancies, the market experienced an 18.1% decline in average rates compared to the same month last year. This was largely due to the exceptional performance witnessed during February 2013 when Abu Dhabi hosted IDEX, a biennial megaevent which allowed hotels to command significantly higher average rates. This year, the lower average rates significantly impacted room revenues that were further suppressed by increased rooms expenses and payroll costs. Limited improvements in cost controls witnessed through higher overhead costs and operating expenses caused profitability levels to plummet by over 20%” commented Goddard.

Kuwait hotels reported low performance 

The low performance registered by Kuwait hotels in February was attributed to outbound travel during the national holiday which caused occupancy to slump 10.2 percentage points to 48.4%. A 1.2% rise in ARR to US$280.66 was insufficient to negate the fall in occupancy which drove RevPAR down 16.4% to US$135.91. Low corporate demand resulted in a 10.9% fall in conferencing and banqueting revenues which suppressed TRevPAR, causing it to decline 16.6%. A 2.7 percentage point rise in payroll costs coupled with a surge in operating expenses weighed heavily on the bottom line as GOPPAR plummeted 26.7% to US$116.03.

Table - MENA Chain Hotels Market Review - February 2014

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